An Update On Assetz Capital For Lenders

We had a question from a reader about a closed P2P lending provider that had around £200 million of lending outstanding when it decided to change its business model and wind-down P2P lending in December 2022.

4thWay reader’s question

Hello

I have found your knowledge over the years invaluable. I will be making a donation. [Editor’s note: he really did write that!]

Could I have your opinion on the Assetz Capital run off book. I have around 5k still will them but the monthly return has become a trickle. Is money in there now a dead loss?

Thanks again.

Ken

My response

We haven’t received any exclusive or detailed data from Assetz Capital for years, nor any documentation or conducted any interviews with them. So I have to make do with what I’ve got.

My expectations on the 23rd January 2023 were for around 2/3 to be paid back by now in Assetz Capital’s auto-lend accounts. I believe about 69% has been paid back or written off, so pretty close to the initial estimate 3.5 years ago.

I also wrote back then that that I expecited loan repayments would slow to “a trickle” in 2026 and that has happened. We’re on track to see repayments this year of around 1/7th of the pound value that was repaid on average in 2023, 2024 or 2025.

I also considered it likely that many lenders will have had most of their loans repaid by the end of 2027.

Manual lending has probably seen repayments of about 53% of the amount outstanding repaid or written off since Assetz Capital closed its P2P lending three years ago. This year is very slow, as expected, but 2027 is more likely than not to be a quite a bit better for repayments.

A lot of bad debts will hang on beyond 2027, leaving mostly whatever defaults are still going through recovery procedures. Many of those debts will drag on a long time, but the majority of lenders should have seen most of their funds repaid by this point. From the limited information, it appears from a distance that losses on average before interest earned haven’t been horrendous so far, although we need more time, as the dregs will be left till the end.

Back in January 2023, I did warn that, despite the averages, “The specific loans you hold mean that you could be very lucky and be repaid quickly or you might have most of your money stuck in Assetz Capital for years.

I didn’t mention fees in my response to that lender

I don’t want you to think I’ve forgotten this, so I’m quickly adding a few sentences on it. Especially as it’s potentially a useful warning sign to everyone using P2P lending accounts about one of the potential risks of doing so.

It’s not surprising that 4thWay still sometimes gets emails from lenders complaining about the fact that they were allowed to open accounts and start lending just prior to Assetz Capital closing its online lending products. Lenders believe that Assetz Capital must have known this change was coming, so they were knowingly locking their money into the upcoming wind-down period. Early-exit options were switched off.

Then of course came higher fees that lenders have had to pay during the runoff period as well as “draconian” charges for ISA transfers.

So far, higher fees and costs during closure have more been the exception than the rule, but it certainly has happened quite a few times.

Pages mentioned above

When Will Assetz Capital Lenders Get Their Money Back? from the 23rd January 2023.